Hong Kong police have arrested seven crew members in connection with a ferry boat collision that killed 38 passengers, including four children, in the city's deadliest maritime accident in 40 years.

Police Commissioner Tsang Wai-hung said those arrested, including the boat's captain, were were under investigation for negligence, and that they did not "exercise the care required of them by law."

He said additional arrests would be made, although he did not elaborate further.

More than 120 employees of the Hong Kong Electric Company were onboard the Lamma IV vessel with their families Monday evening to view a fireworks display celebrating China's National Day, when the vessel collided with another ferry near Lamma Island, off the southwest coast of Hong Kong island. The ferry began to sink shortly after impact, throwing all passengers into the water, according to the Hong Kong Fire Services Department.

Television images showed the bow of the boat pointing straight up, with the vessel partially submerged. Seven boats, including a diving support vessel and hundreds of rescue crews, were dispatched overnight, but low visibility hampered rescue efforts.

Twenty-eight bodies were recovered from the water, and eight other victims were declared dead at nearby hospitals. Two other bodies found onboard raised the death toll to 38 Tuesday night.

The remaining passengers were treated for injuries, but four remain in serious or critical condition, according to a government statement.

"The rear of the ferry started to sink. I suddenly found myself deep under the sea," one passenger told the South China Morning Post. "I swam hard and tried to grab a life buoy. I don't know where my two kids are."

Survivors described a frantic scene in the aftermath: Passengers smashed windows to break free, rushing to get life jackets as the water crept into the vessel.

The commuter ferry that collided with the Lamma IV, operated by the Hong Kong and Kowloon Ferry company, appeared damaged but managed to return to port safely.

"There was a boat that came in close and crashed," Yuen Sui-see, the director of operations for Power Assets Holdings Ltd., which owns the Hong Kong Electric Company, told the Associated Press. "After the crash, the other boat continued away. It didn't stop."

Sui-see added that with 121 passengers and three crew members onboard, his company's vessel was well below its capacity of more than 200.

Salvage crews used cranes to lift the sunken vessel Tuesday night as mourners watched and wept. Relatives of victims traveled to take part in a traditional Chinese mourning ritual, praying alongside Taoist priests and tossing spirit money into the wind, according to the Associated Press.

Large-scale accidents are rare in Hong Kong, where the waterways are among the safest not to mention the most tightly regulated.